PwC: Digital Consumption Driving Media Dealmaking

Demand for spectrum, streaming content at core of investment activity

Companies in the media industry are making investments to keep up with consumers' shift to digital consumption, according to PricewaterhouseCoopers' newly released 2013 U.S. deal insights for the entertainment, media and communications sector. Deals activity in the sector is expected to remain "robust" as companies respond to the demand for spectrum and access to deep content libraries.

With consumer demand for bandwidth increasing, EMC companies are seeking merger and acquisition opportunities to gain spectrum, a larger portfolio of services, new customers and to expand their geographic reach. Deal value increased from $26.9 billion in 2011 to $43.5 billion in 2012, primarily because of Softbank's $20 billion-plus deal with Sprint.

The race to satisfy customer demand for content will continue to drive media deals, PwC anticipates. Potential buyers are looking for large, exclusive content libraries. And as technology continues to change the media landscape, technology companies will invest in traditional EMC companies and vice versa. Cable deal value increased from $3.4 million in 2011 to $9.1 million in 2012, and PwC expects that cable companies will experiment with ways to capitalize on the shift to digital and expand their subscriber base.

"More than any other sector, EMC companies are ahead of the pack in pursuing deals, partnerships and joint ventures to address the accelerated pace of change in consumer behavior," said Bart Spiegel, PwC's U.S. entertainment and media deals partner. "Media companies are investing in robust content management systems and dynamic analytics to not only operate efficiently but also to take advantage of new opportunities."

Communications market players are looking abroad for investments so that they may reach a global audience, according to PwC's report, and PwC anticipates that divestiture will be a significant source of capital for companies looking to expand.

Publish date: April 25, 2013 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT